Understanding Your Title Commitment

A Guide to Title Commitments and Title Insurance from a Real Estate Attorney

When navigating a real estate transaction, few documents are as important, yet as misunderstood, as the title commitment. This legal and transactional report plays a pivotal role in protecting buyers, lenders, and sellers alike. However, its structure and purpose often confound even seasoned parties.

This guide breaks down everything you need to know about title commitments, such as what they are, why they matter, how to read one, what common issues arise, and how attorneys and clients should approach them to maximize protection and minimize risk.

What Is a Title Commitment?

A title commitment (also called a title insurance commitment, preliminary title report, or commitment for issuance of title insurance) is a formal document issued by a title insurance company before closing that outlines the conditions under which the title insurer promises to issue a title insurance policy once those conditions are satisfied.

It serves as a conditional promise that title insurance will be issued, but it is not the insurance policy itself. Only after the transaction closing and completion/satisfaction of all requirements in the commitment will the title company issue the final title insurance policy.

Title commitments result from a title search and examination of the record of a particular property, and can be issued for all types of property, including residential and commercial. This is an investigation of all available public records to determine the legal status of the property’s ownership and any claims or encumbrances recorded against it.

Why Title Commitments Matter in Real Estate Transactions

Title commitments are essential. These documents contain many features and substantial information, such as:

1. Reveal Issues Before Closing

A title commitment discloses any liens, defects, judgments, encumbrances, easements, and other recorded matters that could affect clear ownership or the right to use the property. Buyers and lenders receive this information before closing, allowing them to make informed decisions.

2. Set Conditions for Issuing Title Insurance

Title insurance protects against financial loss from title defects after the purchase. The title commitment outlines the conditions that must be met before the insurer will issue the title insurance policy (e.g., liens must be paid off in full (or negotiated then paid), judgments must be released or satisfied, HOA dues must be current, etc.).

3. Protect Buyers and Lenders

A mortgage lender will almost always require a title commitment and subsequent title insurance policy as part of their loan approval process. This ensures that the lender’s security interest in the property is protected if title defects later arise after closing. This also helps buyers secure protection for their ownership rights.

4. Clarify Coverage and Limitations

The title commitment not only explains what will be insured but also reveals what won’t be covered under the insurance policy (called exceptions to coverage), which helps buyers understand risks they might assume once the transaction is complete.

Title Commitment vs. Title Insurance Policy

The distinction between a title commitment and a title insurance policy is critical:

Title Commitment: A preliminary report showing the title insurer’s promise to provide insurance after certain conditions are met.

Title Insurance Policy: The final contract that provides real coverage, protecting the owner or lender from losses due to covered title issues that arise after the policy’s issuance.

The Difference: The commitment outlines what will happen if everything on paper is resolved. The policy is the legally binding document, or the contract between the insurance company and the owner (or lender), that protects the insured parties after closing.

Key Components of a Title Commitment

Title commitments typically follow a standard form (often based on American Land Title Association (ALTA) forms) and are divided into key sections, usually called Schedules.

• Schedule A – Basic Transaction Information: This section contains the “who, what, where, and how much” of the transaction, including the commitment date, the proposed insured parties (often structured as a buyer policy, lender policy, or both), the amount of insurance coverage proposed, the legal description of the property, how title is currently vested (ownership details), and more.
• Schedule B – Requirements & Exceptions: This is the most critical part of the title commitment and is usually broken into two sub-parts.
• Schedule B, Part I – Requirements: This section contains requirements that must be satisfied before the insurance policy can be issued. Common examples include: paying off existing liens or mortgages, clearing unpaid property taxes, obtaining releases of judgments affecting the property or the sellers, recording the new deed and loan documents, correcting title defects, etc. These requirements represent the title company’s conditions for issuing the policy. Failure to meet them can delay or even halt closing.
• Schedule B, Part II – Exceptions: This section lists matters that the title insurance policy will not cover. Typical exceptions include: utility easements, covenants, conditions, and restrictions (CC&Rs), mineral rights reservations, certain recorded restrictions or encumbrances, any unrecorded or unpublicized documentation or claims, etc. Exceptions define the limits of the insurer’s liability. They are not necessarily problems, but they clarify what is outside coverage.

How to Read Your Real Estate Title Commitment

Understanding the information in a title commitment is crucial to avoiding expensive surprises, which may not materialize until years after closing.

1. Verify Schedule A Details. Ensure all details and contents are accurate, such as the spelling of all parties’ names, the legal description of the property, and proposed coverage amount.
2. Carefully Review Requirements. Move swiftly to cure liens and outstanding taxes, address any unusual issues, take prompt action to commence probates or quiet title actions if necessary, obtain required documentation from ex-spouses or heirs, etc.
3. Understand Exceptions. Confirm that you agree with the stated exceptions, or what items or risks will not be covered under the title insurance policy.
4. Consult Professionals. Title commitments can be technical. Attorneys often review commitments to ensure all requirements are properly cleared, exceptions are acceptable or addressed, there are no hidden legal risks, and more.

Common Title Issues in Title Commitments

• LIENS: Liens such as from unpaid taxes, judgments, or mechanics’ liens can create a cloud on the property’s legal title. Title commitments typically require these to be cleared before policy issuance
• EASEMENTS AND ENCUMBRANCES: Easements (like utility line access) can limit how property is used. These rarely block closing but may affect future plans.
• ERRORS IN PUBLIC RECORDS: Errors such as incorrect legal descriptions or ownership details can jeopardize clear title. Title commitments highlight these for correction.
• RESTRICTIONS AND COVENANTS: Restrictions (e.g., architectural controls or HOA rules) can affect property use. These usually appear in the exceptions and should be reviewed.

Title Commitment Tips for Buyers

1. Don’t Ignore Small Errors. Even minor inaccuracies in names or legal descriptions can cause coverage issues after closing. Lawyers often catch these before they become costly.
2. Understand What Exceptions Mean. Some exceptions are innocuous; others could affect your enjoyment of the property. For example, easements for a neighbor’s access might limit building plans.
3. Involve Legal Counsel Early. For complex transactions or unusual title issues, an experienced real estate attorney can interpret commitment language and guide resolution. Lawyers can also negotiate with title companies if unusual requirements appear.
4. Coordinate with Lenders. Lenders frequently insist on specific title insurance coverage. Review the title commitment with your lender to ensure that all requirements for lending conditions are satisfied.

Common Misconceptions About Title Commitments

Title Commitment Is Not a Guarantee of Coverage

Though it promises coverage if all requirements are met, a title commitment is not a guarantee that issues won’t arise later. It reflects a snapshot in time.

Commitments Can Change

If new title issues are discovered (for example, additional liens), an updated commitment can be issued prior to closing that reflects these new matters.

Title Commitments Are Not Opinions on Marketability

They show recorded matters affecting title but do not guarantee legal conclusions about marketable title, only that the insurer intends to issue a policy if conditions are met.

Oklahoma Title Commitment Attorneys

Whether you are a first-time homebuyer, seasoned investor, or real estate professional, reviewing your title commitment with care and expert support when needed is essential to safeguarding your (or your client’s) real estate interests.

If your next real estate transaction involves title insurance, our firm can review your title commitment and advise you on resolving title issues, understanding exceptions, and ensuring your policy provides the protection you need.

If you received a title commitment and are looking for Oklahoma’s best real estate attorneys, Oklahoma’s fastest probate attorneys, or Oklahoma’s leading quiet title attorneys, contact Avenue Legal Group today. Our firm routinely handles title commitment matters across the state, we offer quick resolutions, and we can typically defer portions of our payment until a transaction closes, or a matter is concluded, for our clients’ convenience.

For more information, see our article Real Estate Title Insurance Explained.